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Miseries of the M-PESA agent

  • By Timothy Roberts
  • Wednesday, December 01, 2010

Successful companies, technologies, and even people become the target of those that want what those others may have.

From a recent trip to Kenya we noted that the Mobile Money market is definitely a mature market in Kenya. And definitely like we were in the heart of a lot of key learnings.

With mature markets, comes even more cunning and innovative ways to beat and trick the system that was delivered to create prosperity in the country.

In previous posts and articles I’ve stressed how the agent network is key to success. From our humble beginnings we focused our attention on ensuring Agent/Distribution networks were delivered utilizing a rock solid process where technology assists in providing a fail-proof mechanism, and therefore validated by results.

After my return home, I was in disbelief when I read the some of the problems that the M-PESA agent faced in their markets such as SMS trickery, Service Outages by the provider, employee theft, and even the use of fake currency.You can read an article with more details here.

Digging back farther in my history; in 1999 I was proud to be part of a team that delivered the first Mobile Banking with Royal Bank of Canada and Fido (now owned by Rogers) . We delivered a complete end-to-end 3DES encrypted solution on a 2G network. From that experience in 1999 we gained a better understanding on how we would approach the market differently if only other features of the 2G network/Handset were available for us to use. Ten years later, the market delivered such a solution (it was actually delivered sooner) in the way of USSD Phase 2+. I often get the naysayer’s rebuking that USSD is not secure, yet these are same people that use or allow Telephone banking via DTMF to occur over their network, not realizing that DTMF is very easy to decipher using a simple $10 appliance and a wire-tap. USSD, which is not stored in utilized the GSM encryption libraries for voice communications and secures the end-to-end tunnel (there are only 2 markets worldwide that do not use GSM encryption which are primarily due to export encryption laws).

For a system that is becoming the backbone of the financial system in Kenya I would hope that service outages are far and few between. For such an essential service to bear an outage of more than 24 hours violates all SLAs in the telecom world, and being presented as a financial system, has even more rigor tied to it. Delivering a highly available system, with built in internal redundancy, disaster recovery system, and methods to recover from severe catastrophic conditions is the not only the onus of the operator, but one which should be provided by the vendor providing such as system.

Technology can assist to reduce employee theft and detect fake currency that is introduced into the system. In this particular example I believe a business model that keeps the M-Pesa agent honest is one that could generate the behavior that market needs.

Seeing real-market problems first-hand helps to build better systems, and fine-tune global solutions for specific market needs.

More importantly a proactive partner/vendor that can foresee these problems through global experiences and leverage such experiences to ensure such problems are not repeated is the insurance package an mobile operator should subscribe to when preparing and evaluating the key element to a mobile money deployment.